2014 OUTSELL SIGNATURE EVENT Annual M&A Outlook presented by Wilma Jordan, Chief Executive Officer The Jordan, Edmiston Group, Inc. October 1, 2014
M&A Overview 2
M&A Overview Industry Sector M&A Market still Highly Active slight increase in number of deals and 103% increase in value for 2014YTD vs. same period in 2013 No. of Deals Value (millions) No. of Deals Value (millions) No. of Deals B2B Online Media & Technology 47 $374 50 $1,881 6% 403% B2C Online Media & Technology 161 $4,590 120 $12,331 (25%) 169% Business to Business Media 25 $322 24 $2,011 (4%) 525% Consumer Magazines 33 $1,578 18 $432 (45%) (73%) Database & Information Services 40 $3,273 47 $3,114 18% (5%) Education Information, Technology & Training 59 $5,891 54 $5,085 (8%) (14%) Exhibitions & Conferences 41 $1,359 34 $410 (17%) (70%) Healthcare Information & Technology 148 $6,310 165 $9,816 11% 56% Marketing Services & Technology 328 $12,319 394 $25,617 20% 108% Mobile Media & Technology 106 $4,770 93 $22,020 (12%) 362% Total 988 $40,786 999 $82,717 1% 103% Source: JEGI Transaction Database Media, Information, Marketing & Technology M&A Activity 2013 January August 2014 January August % Change Value 3
M&A Overview M&A Market Sees Increase in Mega Deals Media, Information, Marketing & Technology M&A Activity Jan Aug 2013 No. of Deals Value (millions) Jan Aug 2014 No. of Deals Value (millions) No. of Deals % Change Value Deals > $500 million 14 $18,805 30 $55,799 114% 197% Deals $50 $500 million 98 $13,542 136 $18,008 39% 33% Deals < $50 million 876 $8,438 833 $8,910 (5%) 6% Total 988 $40,786 999 $82,717 1% 103% Source: JEGI Transaction Database 4
Strategic Buyers Active Strategic Buyers Lead in Number of M&A Transactions and Total Value Number of Deals Transaction Value Source: JEGI Transaction Database 5
Debt Markets Strong Debt Markets Help Drive M&A Volume YTD 2014 surpassed all of 2013, with 157 collateralized debt obligations totaling $85 billion (high yield) For companies over $10 million in EBITDA, total leverage up to 6x EBITDA on middle-market deals with 4.5x senior and 1.5x mezzanine Debt leverage even higher on large transactions for businesses with high quality assets and business models (recurring revenue, etc.) If economy continues to grow, investor demand for yield is expected to remain robust, with vibrant debt markets into 2015 6
Key Trends in M&A 1 Data 2 Tech-Enabled Services 3 4 5 Mobile App Analytics Skills Training PE can be on Par with Strategics 7
1 Data Strategics Focused on Expanding Their Data Footprints Case Study #1 Deal Size: $310 million ( 232 million) Target Overview: leading service for data onboarding, empowering customers and partners to connect data across the marketing ecosystem Acquisition Rationale: enhance Acxiom s capability to bridge the gap between offline data and the rapidly growing universe of online marketing applications Insider View: This deal brings together the world s leading marketing data company with the emerging leader in data onboarding to create the industry s most comprehensive network of connections. Together, we will accelerate our vision of a connected ecosystem that delivers true one-to-one marketing Scott Howe, CEO, Acxiom 8
1 Data Strategics Focused on Expanding Their Data Footprints Case Study #2 Deal Size: Not publicly announced Target Overview: the leading provider of international merchandise trade data to more than 1,100 corporations and other entities in 50+ countries Acquisition Rationale: support IHS Maritime and the company s strategy of building integrated workflow solutions to fulfill industry needs around global trade Insider View: Global trade flow drives demand for our core IHS industries with Global Trade Atlas, IHS will have detailed information on all commodities and other cargo types down to a highly granular level. Combining this valuable trade data with existing IHS capabilities will enable us to create new value for our customers Scott Key, President & CEO, IHS 9
2 Tech-Enabled Services Strategics Focused on Tech-Enabled Services Case Study #1 Deal Size: Confidential (JEGI transaction) Target Overview: a leading, tech-enabled search and digital marketing agency Acquisition Rationale: complement Merkle s industry-focused approach through RKG s deep expertise and penetration in retail and other key markets Insider View: The acquisition of RKG supports Merkle s dedication to helping world-class brands attain the competencies they need to capitalize on the massive opportunity of addressability at scale, which has been brought about by the digital audience platforms RKG represents the best of breed in search, display, social and other digital media marketing solutions Craig Dempster, EVP & Digital Agency Group Leader, Merkle 10
2 Tech-Enabled Services Strategics Focused on Tech-Enabled Services Case Study #2 Deal Size: 70 million ($117 million; 87 million) Target Overview: a leading media monitoring, tracking and evaluation services provider to 2,500 customers globally Acquisition Rationale: strengthen the global expertise of Kantar in delivering media reputation tracking and impact analysis for PR campaigns Insider View: continues WPP's strategy of developing its services in important markets and sectors and strengthening its capabilities in data investment management. WPP 11
3 Mobile App Analytics Mobile is Hot Strong Appetite for App Analytics Case Study #1 Deal Size: Confidential (JEGI transaction TechCrunch rumor: $100MM conservative estimate) Target Overview: a leading provider of accurate and actionable mobile application analytics, data and insights Acquisition Rationale: bring together the best minds in mobile app data and help App Annie accelerate its product roadmap, developing the most advanced mobile app analytics platform Insider View: our mission has always been to provide our users and customers with the best metrics and insights to run their app business. this acquisition represents a major milestone in App Annie s growth, and it allows us to accelerate our product roadmap. Bertrand Schmitt, CEO, App Annie 12
3 Mobile App Analytics Mobile is Hot Strong Appetite for App Analytics Case Study #2 Deal Size: TechCrunch estimate: $10-15 million ( 7.5-11 million) Target Overview: produces software tools to help developers measure, analyze and optimize their Android mobile app s performance Acquisition Rationale: leverage Facebook s world-class infrastructure to help improve the performance of Facebook s apps Insider View: we remain focused on producing useful and engaging mobile apps. The Little Eye Labs technology will help us to continue improving our Android codebase to make more efficient, higher-performing apps." Subbu Subramanian, Engineering Manager, Facebook 13
4 Skills Training Strong Push into Skills Training and Human Capital Management Case Study #1 Deal Size: $175 million ( 131 million) Target Overview: a subscription-based, digital learning solutions provider focused on leadership and managerial skills development Acquisition Rationale: accelerate Wiley s strategy to provide customers with a suite of services, from education through employment Insider View: The addition of CrossKnowledge to our talent management portfolio, which now includes innovative pre- and post-hire assessment solutions from our Profiles International and Inscape acquisitions, positions us as a leader in the rapidly-growing area of enterprise talent management. Steve Smith, President & CEO, Wiley 14
4 Skills Training Strong Push into Skills Training and Human Capital Management Case Study #2 Deal Size: $52 million ( 39 million) Target Overview: leading provider of learning benchmarks and analytics solutions for talent development professionals Acquisition Rationale: combine with CEB s insights and predictive analytics to help HR staff drive substantial returns on their huge investments in development and training Insider View: companies must apply the same rigor to managing their people as they do their balance sheet This acquisition accelerates the groundbreaking work we have done to provide HR leaders with actionable solutions to measure the effectiveness of their development and talent management strategies Tom Monahan, Chairman & CEO, CEB 15
5 PE can be on Par w/strategics Private Equity Firms Can Pay Similar Valuations to Strategics on Select Deals Case Study #1 Deal Size: $752 million ( 562 million); 9.4x revenue Target Overview: a leading provider of cloud-based education technologies to prevent plagiarism, verify content and evaluate student learning Acquisition Rationale: acquire a high growth platform with strong recurring revenue and the opportunity for product innovation and add-on acquisitions Insider View: iparadigms operates an incredible business that solves some of the most persistent and universal challenges in education We look forward to working with the team to serve its very loyal customer base and to invest in product innovation that will continue the company s amazing track record of high growth. Deven Parekh, Managing Director, Insight Venture Partners 16
5 PE can be on Par w/strategics Private Equity Firms Can Match Strategics Valuations on Select Deals Case Study #2 Deal Size: $240 million ( 179 million); 10x revenue Target Overview: a leading provider of technical information to the automotive aftermarket, publishing technical information on 17,000 vehicle models from 80 manufacturers Acquisition Rationale: provide must have information products and work flow tools to mechanics; high growth company, with strong management team and reputation Insider View: look forward to continuing Autodata s strong record of growth by further expanding our product range and geographic footprint both organically and by acquisition with the support and financial backing of Bowmark and Five Arrows. Rod Williams, Chief Executive, Autodata 17
Predicting the Future Predictions for the Next 12 Months 1. Bullish debt market may lead to burst of bubble 2. Newspaper spinoffs will consolidate to form a national company 3. Asian buyers will acquire soft asset businesses in US and Europe 4. Stable economy continues 5. And finally some inevitable fallout from The Digital Revolution 18
Prediction #5 The Digit Revolution the next generation will have stronger thumbs Facebook Candy Crush Snapchat Instagram Twitter Angry Birds Not tonight, honey. My thumbs are tired 19